Can You Go To An Open House Without Your Agent?

Hi Dave,

Just curious if this applies to Open Houses: if a couple has chosen a real estate agent, should we not go to open houses on our own? Do we need to announce who we're working with when we walk in? We had seen a particular house with our agent, and the next week it came up as an open house and we wanted to see it a second time, but didn't want to take up the agent’s time again.

Name withheld, Grand Junction

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Name withheld,

This is an easy question to answer…. Finally!  Just kidding, but the answer is easy!  An open house is held “open to the public” for anyone to come look at a home, regardless of their agent representation.  The scenario you described happens all the time and it is always best to just let the agent who is working the open house know that you had seen it with your agent and you are just coming back to take a casual second look.  Let them know who your agent is and leave it at that.  It was kind of you to be respectful of your agent’s time, but I am sure he/she would have been happy to go with you if you desired.

Dave Kimbrough

The Kimbrough Team

RE/MAX 4000, Inc. 

What Is The Deal With Sellers Paying For The Buyers Closing Costs?

Dave,

We just listed our home for sale and our agent informed us that buyers in our price range are going to ask US to pay THEIR closing costs.... I was floored.  I have never asked anyone to pay my closing costs when I have purchased any of our homes and certainly do not have much interest in paying them on a buyers behalf.  I am going to have my own costs to pay, without paying theirs too.  We do not feel like we should pay someone to purchase our home.  The whole thing just does not make sense to us  and when we asked her why?, she just said, “it is the way it works now days.”  I agreed and just moved on, but it still does not sit well with us.  Could you please give us a better explanation of why we will be required to pay the buyers closing costs? 

Les and Joanna, Grand Junction

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Les and Joanna,

I can assure you, you are not the only sellers I have heard this from, “if they cant afford to pay their own closing costs, they certainly cant afford to buy my home”.  Seller paid closing costs, must be somewhat of a newer trend, as it is my sellers who are generally over the age of 50 that have a real disdain for seller paid closing costs, they are fundamentally opposed to it.  I really believe most of the time it is not the costs involved, it is the lack of understanding and the generational gap of a time when you just did not ask for help. Remember, you are not required to pay the closing costs, but let me see if I can make a case for why you should! 

There are a few reasons why this has become quite the trend in home buying.  First, the lenders will generally allow a seller to pay up to 3.5% of the homes purchase price towards the buyers closing costs.  If the seller agrees to participate by paying the buyers closing costs, this lessens the buyers “cash burden” at close and thus allows them to purchase the property with less money out of their own pocket.  This leads us to our second reason this practice has become so vogue, many buyers in today’s market are “cash poor”. 

Lets face it, as a society we largely live hand to mouth and save very little, although our saving habits have become somewhat better since the fiscal crisis of the past several years.    Statisticbrain.com reports (numbers verified 12-26-2013) the average American family has a savings account balance of $3,800 and 25% of American families have no savings at all and 40% of families have no plan or savings for retirement!  I think it is safe to say that we are a “cash poor” society and the more cash it takes to purchase a home the fewer buyers there will be who will be able to buy.  It really is quite simple, you are paying their closing costs to lessen their cash requirements at close and thus increasing the size of the overall buyer pool.  By saving the up front cash expense of closing costs, the buyer may also be wanting to make some improvements or updates to the home after closing and keeping some cash in reserve will allow them to do just that.   Keep in mind that it is by no means, “every buyer” who “needs” the closing costs paid on their behalf.  Many buyers choose to have their closing costs paid by the seller, as this allows them to “roll” their closing costs into their loan.  By rolling their closing costs into their loan, a loan that they likely have at around 4%, it requires them to take less cash out of other investments that may be performing at a higher rate of return than the 4% they are borrowing at. 

As you can see, there are several reasons “why” buyers will ask you to pay their closing costs and you can be assured that if you refuse, many buyers will move on to another property, especially in the under $300k price range.  I always advise my sellers to pay the closing costs and negotiate from a bottom line sales price (their net), rather than getting caught up in who is paying what closing costs.  Just ask your real estate agent to give you a net sheet so you can see what your walk away number will be and negotiate off your net amount, as this is the only number you should really be concerned about.  I hope this helped. 

Dave Kimbrough

The Kimbrough Team

RE/MAX 4000, Inc. 

Is It A Good Idea To Build A House With A Basement?

Dear Dave,

We are making plans to build a home in the next year. As you know, there are so many decisions to make as we go into this process. As we are considering builders and building plans, we are trying to make a decision on whether or not to have a walk-out basement in our new home.

Do you consider a basement to be a good use of building costs? Do you think it is a good idea to have a basement or not? We have options for what type of basement to have, just want to know what your opinion is on this. 

Thanks for the help!

Don & Linda, Grand Junction

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Don and Linda,

Trust me, there are more decisions to make than you can possibly imagine!  The commitment to building is high, but so are the rewards.  I have been through the process many times and often times the number of decisions to be made can prove to be overwhelming, even for the most prepared.  Of all the decisions, to have a basement or not to have a basement may prove one of the easiest!

From a cost perspective, I believe it is hard to find a more cost effective place to add living space than a basement.  A basement can prove to be a valuable asset for anyone who needs to inexpensively expand their living or storage space, but can also provide a wonderful and inexpensive option for a woodworking shop or hobby area.  Basements are very popular features to most home buyers (something to consider for resale down the road), however don’t expect to get the same value from your inexpensive downstairs living space as you do from main floor or even second story finished living area.

 It is a VERY common mistake to assume that living areas below grade are valued at the same price as their above ground counterpart. Unfortunately, that is NOT how it works. Generally speaking, you can assume that the added value of basement square footage is no more than 50% of the above grade value.  This means that if you have 2000 square feet above grade that is valued at $175 per square foot, your below grade value is likely in the $75-$85 per square foot range (even if it is of the walk out basement variety)….. NOT $175 up and $175 down.  Most people think all levels are valued the same, but when it comes to establishing value - below grade living space is just not as valuable as the space above ground level.

To answer your final question, I personally believe basements are a valuable addition to most any home and will be attractive to the majority of future home buyers.  It’s a great way to pump up your living space, while remaining budget sensitive.   I say, “go for it!”

Dave Kimbrough

The Kimbrough Team

Help, All Of The Houses We Want Go Under Contract Before We Get A Chance To See Them!!

Dave,

We are currently looking for a new house here in the Grand Valley. Our budget is around $225,000 and it seems like every time we find a house we want to see, it’s under contract before we can even schedule a showing! What’s the deal with houses in our price range moving so fast? Do you have any advice on what we can do to find something we like before it goes under contract?

Thank you so much for your help!!

Mackenzie & John, Grand Junction

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Mackenzie & John,

Wow! Your observations are absolutely correct!  The segment of the market that you are searching in is moving at a very brisk pace and the competition can be fierce!  I had a property that I put on the market this week and had 3 offers on the first day and the winning bid was significantly over our asking price.   I sure did not see that coming!  However, situations like this are happening with more and more regularity so as a buyer, you must be ready and willing to put your best foot forward right out of the gate.  Don’t be afraid to compete!

There ARE some simple things that you can do to help move your offer up in the pecking order when the offers are presented to the seller!

1.      Be willing to offer more than asking price!  I have seen many an offer lost over $500 or $1000.  If you really want the property and there are multiple offers, go 1-2% over asking price and watch your chances soar!  If the home is $225k, offer $229k and my bet is you get it.

2.      Offer more earnest money than what the seller is requesting.  Earnest money is often times an overlooked negotiating tool that absolutely DOES mean something to a seller and can tip the scales if the offer prices are similar.

3.      Be flexible with the closing and possession date.  This will show the seller that you are willing to work with them and make the transition fit their needs. 

4.      Be willing to cover your own or at least part of your own closing costs.  Over 80% of the offers we see contain seller paid closing costs.  Eliminating these closing costs indicates to a seller that you are a stronger buyer.   After 15 years and thousands of contracts negotiated, it is a fact that most sellers don’t like paying the buyers closing costs.

5.      Do not ask for personal property or things that the seller is not offering as inclusions with the property.  If they have not included the nice new looking refrigerator, don’t ask for it.  If you find their lawn furniture comfy don’t try to throw it in, go buy your own.  I have yet to find a seller who looks upon request for personal property with a favorable eye. 

6.      Be willing to waive your inspection contingency!  If you do this, it will be clear to the seller that you are making a serious offer and have serious intent to purchase the home.  This is a last resort move, however, it is a doozy if you have confidence that the property is in good condition.

These are several techniques to help you up your game in this increasingly more competitive real estate market.  Notice that none of these are high dollar techniques or anything really fancy, but I promise they will make a difference and if you combine 2 or 3 of these in the same offer you will probably have an unbeatable combination.  Remember sometimes it takes a little courage, faith and risk to get what you want so don’t let fear or hesitation hold you back from making things happen.  When you craft your offer with your agent, look at it through the eyes of a seller, be willing to think outside of the box and create a win/win for both parties and I bet you have a new home in no time at all.  I’ll bet the next time you submit an offer, it will be FUN!  Good luck.

Dave Kimbrough

The Kimbrough Team 

Can You Explain What Exactly Title Work Is?

Dear Dave,

            We are in the process of selling our home and will be purchasing a new one.  Right after we listed our property for sale, we received title work from our agent on our home.  Can you explain what exactly title work is?  We were told that we need to review it, but what should we be looking for on the property we are selling?  When we purchase, what should we look for on the title work for the new property – anything different we should look for or the same stuff?  Thank you for your help.

Dennis, Grand Junction

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Dennis,

This really is a great question and a part of the buy/sell process that is far too often glossed over.  It is glossed over, because most of the time people and agents do not know how to answer your question thoroughly and with command of the specifics of what you are looking for.  I am very lucky to work closely with Bob Reece, President of Advanced Title, who is one of the very best real estate experts I know and knows title work inside and out!  I have relayed you question to Bob, to ensure you get the best possible explanation!

"Title work" is really the title commitment and the documents that are referenced in the title commitment such as protective covenants. The commitment outlines the current status of title interests in the property such as the name of the owner(s), any lender and other interests such as easements holders, and the commitment gives sellers and buyers the opportunity to review the title to the property before the closing occurs. The seller should compare the deed with which they acquired ownership to the property with their name(s) as it appears on the title commitment to make sure it is the same. A similar comparison for the legal description is essential. The third area of the commitment are the Exceptions to Coverage that lists various protective covenants, easements, agreements, reservations, etc. that affect the property. These items should compare favorably to the exceptions that appeared in the title policy that was issued when the seller originally acquired the property. And, by example, any easements granted by the seller should also appear as an Exception to Coverage on the title commitment. Any discrepancies found by the seller should be disclosed to his real estate agent as soon as possible and prior to closing so a buyer becomes fully aware of the matters that affect the property being purchased.

A buyer would be wise to review a title commitment in similar fashion; to make sure their names properly appear on the title commitment as found under the real estate contract and on any lender application; that the legal description matches the one found on the seller's acquisition deed; and to review the documents referenced as Exceptions to Coverage to make sure they understand any obligations, restrictions to usage or third-party rights that affect the property about to be purchased.

As Bob intimates, your title review is a very important part of the process, as it lays out virtually everything you need to know about your property and the property you are going to purchase.  Your rights and the rights of others should be spelled out in your title work and thus leave few things, hopefully, to chance.  It is always sound advice to ask questions about ANYTHING you do not understand.

I hope this helps and remember if there are any discrepancies make sure to bring them to the attention of your agent or the title company that has provided the title information so they can be addressed and remedied if need be.  Best of luck selling and buying!

Dave Kimbrough

The Kimbrough Team

I'm Scared My House Won't Close...

Hey Dave, I am purchasing my new house, we are under contract to close April 24th and my lease is up April 30th on my current place.  My agent keeps telling that everything is going to be ok, but not providing much in the way of specifics and it truthfully has me a bit anxious.  I am concerned that she may not be completely informed and with everything shutting down, I am afraid I will be homeless if I can’t close on my new home.  How worried should I be?  Liz, Fruita, CO

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Liz,

I am so sorry, as I know how stressful this is for you!   Honestly, everyone has so much on their plates right now that the “unknowns” are starting to just wear people down.  On our team, our attention the past couple of weeks has been to make sure that our under contract properties stay under contract and make it to the closing table!  If I told you not to worry, you still would and to be truthful you have some reasons for concern as things are not operating “business as usual” even though everyone tells you that it is “business as usual”.  Trust me, right now everyone in my line of work, Realtors, Appraisers, Lenders, Title Companies etc…. are all working double-time to try and make things as “business as usual” for all of their clients. 

My bet is, your agent is telling you that it's all going to be ok because she honestly believes it will be ok!  It is hard to get full control on everything right now, but all of the local title companies have been amazing at creating closing environments that are safe for both the buyers and the sellers and are bending over backward to make it as easy as possible for all parties!  The lenders have been amazing at answering calls and being very responsive to everybody’s concerns about funding because they know everyone is on edge, as are they.  Thankfully, for everyone, funding has not proven to be an issue with any of our residential properties and all the lenders are closing and funding like they always have in the past.  Appraisers are where part of the system bottleneck lies, but that is due to the number of refinances that were applied for when the mortgage rates shortly dropped a couple of weeks ago.  This spike in demand created even more of a log jam in an already narrow body of water, as we have too few appraisers for the demand in just a normal real estate landscape.  I would be willing to bet that all parties to your transaction are working as diligently as they can to ensure your closing goes off without a hitch, but ultimately no real estate transaction happens without some risk or inconvenience. 

I promise you that NOBODY wants you homeless as that word is taboo in my line of work.  At my office over the past two weeks, we have never worked harder to ensure our contracts are moving forward and we are proactive in making sure that we limit surprises.  I hate surprises, even on my birthday!  I would not worry, as you can not control anything that is going on right now and you have good people who are working hard to make sure your outcome is exactly what you expect.  Trust who you have hired, keep in contact with your agent and lender and get ready to move!

Dave Kimbrough

The Kimbrough Team

How Will The Coronavirus Impact The Housing Market?

Hey Dave….. These are crazy times.  We currently have our home on the market and are wanting to downsize.  We listed our house about 6 weeks ago and the showings started strong and have dwindled to near nothing the past 2 weeks.  What should we do?  Should we keep it on the market?  Are prices going to go up or go down?  I guess, overall, how do you think this Coronavirus will impact the housing market here in Grand Junction. 

Judy, Grand Junction

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Judy,

Wow!  You are right!  These are crazy times and the only sure bet is that nobody knows how this will ultimately play out.  Your current experience mirrors most everybody’s experience over the past 6 weeks and the speed that this has happened is hard to fathom.  Two weeks ago homes were being shown and contracts being presented and as of today, there are very few showings and even fewer contracts.  So take some solace in the fact that you are not alone.   I know that not being the only one is not very comforting, but there is some comfort in the fact that there is little you can do right now to change the number of showings you are getting on your home. 

I would suggest holding the line for now and staying the course.  As far as I am concerned, the data sample we currently have is too small to make important decisions.   The real estate market has slowed over the past few weeks, but prior to Coronavirus our team was already on pace to shatter our best year ever and we were only 2 months in!  Things have changed and I am prayerful they can change fast again!  We need to see how the stimulus package falls out and what support that provides to workers and small business owners.  We need to see how long the shelter in place remains in effect, and if in fact, it ends April 11, how fast does the interest in real estate regain its momentum.  What happens with interest rates? Interest rates are all over the board, up one day, down the next.  There are too many blurry angles to get a real clear picture of what lies ahead, but I am confident in Mesa County’s short and long term future.  I think prices will remain fairly solid as inventory is still low and demand will once again be high after the fog lifts.  Mesa County needs more homes, as I believe demand will grow from this Coronavirus as people realize that living on top of one another in urban settings is not as appealing as it was pre-pandemic.  There are going to be many silver linings to these events, but may not be completely visible yet.  A certain level of faith is the name of the game moving forward.

There are so many variables that are far above my pay grade that I am taking the outlook of controlling the things I can control and letting go of the things I can’t!  Take a deep breath and come to the realization that this is a global issue and the bumpy road ahead will spare very few.  I can remember my mom saying, “we are all in this together” and I would think, yeah we are in this together because you are making me be “all in this together”, but in this case, we really are ALL in this together!  I am prayerful that each and every one of us can put aside our politics, religion, sexual identity, and economic status and band together moving forward.  Maybe a pandemic is what was needed to bring us all back together!   It's hard to see the light when you just enter the tunnel, but as you keep walking the light will appear and hopefully keep getting brighter!  I hope that helps.

Dave Kimbrough

The Kimbrough Team

What Size Trees Should We Plant In Our Yard?

Dear Dave,

I have been out shopping at the local nurseries trying to get some ideas on landscaping materials. My home is about 7 years old and doesn’t have many established trees in the yard. There are different sizes of trees throughout the neighborhood. I want to know what you think is better to do - plant only a couple of large trees (due to the price) or plant about 3 times as many smaller trees (due to the price)?? My wife has one opinion and I have another - I won’t tell you which so you can give your honest opinion!

Thanks-

Lee and Jenni, Fruita

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Lee and Jenni,

Ok, this is an easy one for me and I will be honest!  Go with the larger trees.  Planting saplings in the yard and waiting 7 more years for them to become trees is for sure one of my pet peeves.  We are currently planting some trees at my own home and my wife and I banter this issue back and forth virtually every day the tree planting topic comes up. 

She says, in a few years they will mature out etc… and I say that I would prefer them to look somewhat mature now I don’t want to wait years to enjoy them.   I won’t tell you who will win at my house, but at your home I hope the bigger tree vote wins! In my opinion this is one instance where bigger really is better! J  Happy planting.

Dave Kimbrough

The Kimbrough Team